Squeezed By Adidas And UA, Nike'S Leading Edge Is Weakening.

According to the world clothing and shoe net, the world's largest sports product manufacturer

(Nike, NYSE:NKE) released its 2017 quarter second quarter results yesterday. In the 3 months ended November 30, 2016, the group net profit increased 7% to 842 million dollars (5 billion 837 million yuan) compared with the same period last year, and the income increased 6% to 8 billion 180 million dollars (about 56 billion 706 million yuan) over the same period, which is higher than that expected by Wall Street.

This is Nike's 28 consecutive quarter of growth.

On that day, Nike's share price rose by 1.7% to 52.67 dollars due to this good news.

But this year, Nike's share price has fallen by more than 17%, far away from the Dow Jones and industry averages.

Investors are worried, including

(Adidas), new competitors such as Andemar (Under Armour) and Lululemon have already brought trouble to Nike's North American base camp.

Nike's revenue in its most important North American market increased by 3% to $3 billion 650 million this quarter, although its top two competitors remained ahead of the absolute sales figures, but its two largest competitors recorded a two digit growth in the latest quarter.

At the same time, as an important data for investors to assess future sales trends, Nike's future orders growth is also less than expected.

In the two quarter, Nike's future orders grew by 2% (fixed dollars), less than 5.2% expected by Wall Street analysts.

Although Nike management said that the company's future orders data did not include Nike's

Brand, golf equipment and some other products have little to do with actual sales trends, but investors do not buy that.

Basketball is still Nike's most important business area, contributing 5.1% of its sales in the last quarter of May 2016.

However, the joint boots launched by Andrea and NBA Stephen (Stephen Curry) seem to be more popular among basketball fans, which has brought a lot of pressure to Nike.

Nike's response is to introduce relatively inexpensive new sneakers Jordan 31 and Kobe A.D..

"Basketball business is in a more healthy state than it was 18 months ago."

Nike brand President Trevor Edwards pointed out in a conference call that after a series of strategic layout, basketball business is recovering and is expected to resume growth after May 2017.

Nike's gross profit margin dropped to 44.2% in the quarter, due to the increase in production costs, the strengthening of the US dollar and the rise in retail prices, and the two quarter of the year fell.

Bloomberg analyst Chen Grazutis pointed out that this means Nike will rely more on discount sales to gain sales growth, which is not a good sign for the company.

In other markets around the world, Nike has maintained good sales growth in Japan and greater China, up 16% and 12% respectively.

The decline in tourists caused by geopolitical turbulence has slowed the growth of sales in central and Western Europe to 1% and 7% respectively.

It is noteworthy that the growth of DTC (direct-to-consumer) channels, including self run terminal stores and official website, is faster than the overall level in terms of channels.

In the quarter, Nike's e-commerce subscriptions grew by 46%, and DTC's overall growth rate reached 23%.

CEO Mark Parker believes that Nike will still have much room for development in the future.

In addition to continuing to invest in Internet channels, Nike also opened a big Mac flagship store in SOHO District of New York this year.

The five floor flagship store has an area of more than 5000 square meters, and has experience areas such as basketball, football and running.

Nike's goal is to achieve a turnover of 50 billion US dollars in 2020, which was US $32 billion 400 million in the last fiscal year.

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